Investor Presentation May 13, 2016
Cautionary Statement Regarding Forward Looking Information and Other Matters This document and the remarks made within this presentation may include, and officers and representatives of American International Group, Inc. (AIG) may from time to time make, projections, goals, assumptions and statements that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These projections, goals, assumptions and statements are not historical facts but instead represent only AIG’s belief regarding future events, many of which, by their nature, are inherently uncertain and outside AIG’s control. These projections, goals, assumptions and statements include statements preceded by, followed by or including words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “focused on achieving,” “view,” “target,” “goal,” or “estimate.” It is possible that AIG’s actual results and financial condition will differ, possibly materially, from the results and financial condition indicated in these projections, goals, assumptions and statements. Factors that could cause AIG’s actual results to differ, possibly materially, from those in the specific projections, goals, assumptions and statements include: changes in market conditions; negative impacts on customers, business partners and other stakeholders; the occurrence of catastrophic events, both natural and man-made; significant legal proceedings; the timing and applicable requirements of any new regulatory framework to which AIG is subject as a nonbank systemically important financial institution and as a global systemically important insurer; concentrations in AIG’s investment portfolios; actions by credit rating agencies; judgments concerning casualty insurance underwriting and insurance liabilities; AIG’s ability to successfully manage run-off insurance portfolios; AIG’s ability to successfully reduce costs and expenses and make business and organizational changes without negatively impacting client relationships or AIG’s competitive position; AIG’s ability to successfully dispose of, or monetize, businesses or assets; judgments concerning the recognition of deferred tax assets; judgments concerning estimated restructuring charges and estimated cost savings; and such other factors discussed in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and Part II, Item 1A. Risk Factors in AIG’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016 and Part II, Item 7. MD&A and Part I, Item 1A. Risk Factors in AIG’s Annual Report on Form 10-K for the year ended December 31, 2015. AIG is not under any obligation (and expressly disclaims any obligation) to update or alter any projections, goals, assumptions or other statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise. This document and the remarks made orally may also contain certain non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP measures in accordance with Regulation G is included in the First Quarter 2016 Financial Supplement available in the Investor Information section of AIG's corporate website, www.aig.com, as well as in the Appendix to this presentation. Nothing in this presentation or in any oral statements made in connection with this presentation is intended to constitute, nor shall it be deemed to constitute, an offer of any securities for sale or the solicitation of an offer to purchase any securities in any jurisdiction. 2
Vision for AIG Douglas M. Steenland, Non-Executive Chairman “AIG is committed to serving all its stakeholders by: i) delivering first quartile total shareholder return to its shareholders, ii) providing risk expertise and dependable long-term balance sheet strength for its customers, iii) having a culture of strict adherence to both the letter and spirit of regulatory requirements; and iv) maintaining an environment that attracts and retains world class employees.” “Over the past several years, AIG has had superior total shareholder returns, and tens of billions of dollars have been unlocked for shareholders. The Board and management are committed to continuing to deliver shareholder value.” Peter D. Hancock, President and CEO “Today, AIG announces steps to narrow its focus, improve its financial performance, and return capital to shareholders. While we take these steps to maximize shareholder value, we continue to think holistically about all of our stakeholders. Importantly, we are committed to being our clients’ most valued insurer.” 3
AIG Announces Actions to Create a Leaner, More Profitable and Focused Insurer 2016-2017 Board Approved Actions • Return at least $25 bn of capital to shareholders • Pursue an active divestiture program, including initially the 19.9% IPO of UGC as first step towards full separation and sale of AIG Advisor Group, while preserving the value Strategic of deferred tax assets Actions • Could consider separation of even larger modular business units of the Commercial and Consumer segments over time with deferred tax asset (DTA) utilization, contingent on improvements in the credit risk profile and operating performance • Reorganizing operating model into “modular”, self-contained business units to enhance transparency and accountability, driving performance improvement and strategic flexibility over time Organizational Changes • Introduce new Legacy Portfolio, including the 24% capital allocated, to enhance transparency and highlight the progress to over 10% ROE (1) by 2017 for Operating Portfolio Reduce firmwide gross general operating expenses (GOE) (1) by $1.6 bn • Operating Improvements Improve Commercial P&C accident year loss ratio (1) by 6 points to ~60% by 4Q17 (2) • Notes: (1) Non-GAAP financial measure. See appendix. (2) Target represents fourth quarter exit run rate. 4
Clear and Achievable Financial Targets Normalized ROE of ~9% by 2017, reflecting 10.3 - 10.7% in the Operating Portfolio Legacy Portfolio (1) is a source of capital release totaling ~$9 bn by 2017 10.3 - 10.7% 9.3 - 9.7% Operating Portfolio (2) (2) Operating ROE '16E Operating ROE '17E ~9% 8.4 - 8.9% Consolidated (2) (2) Operating ROE '16E Operating ROE '17E $23 bn ~$14 bn Legacy Portfolio (1) (3) (3) Equity '15 Equity '17E Notes: (1) Legacy Portfolio assets may evolve over time. (2) Normalized operating ROE excluding AOCI & DTA, a non-GAAP financial measure. Operating Portfolio normalized operating ROE adjusted for allocation of Corporate GOE and pushdown of parent debt. See appendix. (3) Average Shareholders’ Equity excluding AOCI & DTA and adjusted for the allocation of Corporate GOE and pushdown of parent debt to the Operating Portfolio; non-GAAP financial measure. 5
Progress On Financial Targets Objective FY 2016 Target 1Q16 Selected Actions Reduce ~$700mm; Decline of $140 million, or 5% YoY on a constant dollar basis Operating 6% Reduction $2.6B Primarily driven by staff reductions and benefits rationalization in Net GOE Expenses Increase Improvement of 110 bps YoY Active capital management, GOE reductions and Personal Normalized 8.4 - 8.9% 8.9% Insurance underwriting drove improvement ROE 50 basis points benefit from lower effective tax rate Grow Book Value per Decline of 0.4% in 1Q16 reflects market volatility, including net $59.05 14 - 16% realized capital losses Common Share, ex. AOCI & DTA 1 Total of $4.0B returned to shareholders in 1Q16 Return Capital to $25B Includes $3.5B of share repurchases, $173 mm of warrant $4.0B Shareholders through 2017 repurchases and $363 mm of dividends paid to shareholders Additional $870 mm of share repurchases through May 2, 2016 Improve 1.7 pts of improvement from FY’15. Up 0.1 pts YoY Property ~62 – Executed reinsurance agreements 64.5 – Remediating and re-pricing U.S. Casualty business Casualty AYLR 2 1) Adjusted for dividend growth. 2) Target represents fourth quarter exit run rate. 6
Return Significant Capital to Our Shareholders in 2016-2017 Return at least $25 bn of capital to shareholders through dividends and share repurchases Capital return goal can be achieved notwithstanding strengthening of reserves in 4Q’15 Projected Sources for 2016-2017 Capital Return Goal ($ bn) $25 $2 $3-5 $4-5 $5-7 $7-10 Operating Subsidiary Divestitures (2) Life Reinsurance Target Financial Asset Allocation Capital (3) (4) (5) Dividends and Tax- Transactions Leverage Shift Return Goal Sharing Payments (1) Notes: (1) Dividends and tax-sharing payments (including monetization of deferred tax asset) to Parent, net of Parent operating expenses, debt interest expense, and capital contributions. (2) Includes 19.9% IPO of UGC. (3) Series of reinsurance transactions on certain books of life insurance liabilities in process. (4) Contingent on improvements in operating performance and interest coverage. (5) Plan to monetize a significant portion of our hedge fund investments to reduce capital charges and increase projected distributions. 7
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